The private market is providing adequate liquidity for closed-end second liens, according to the American Bankers Association. The trade group also questioned Freddie Mac’s motivations for a proposal to acquire seconds.
A few years back, Better looked like a sure thing: It boasted state-of-the art origination technology. Today, the nonbank is bleeding red ink and dependent on a convertible note held by a Japanese multinational.
A decline in interest rates near the end of 2023 drove up refi volume. Meanwhile, purchase-mortgage lending declined slightly on a sequential basis as seasonal factors limited demand. (Includes four data tables.)
Another long-time player is exiting warehouse lending. The twist: There’s nothing wrong with Flagstar’s nonbank business. The problem is that the depository is owned by NYCB, which needed an investor-infusion earlier this year.
Some see Freddie Mac’s proposal to acquire second liens as a way to boost originations of the products. Others suggest that GSE involvement in the sector will have minimal impact as demand from borrowers appears to be limited.
Lenders continue to make bulk purchases to offset runoff in their portfolios and make up for anemic originations. However, demand for MSRs could be near a peak, according to industry analysts.
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